Op-Ed: Taxes shouldn't automatically increase each year

Published 5:18 pm, Thursday, November 8, 2012

The Board of Estimate and Taxation Budget Committee recently issued draft budget guidelines for fiscal year 2013-14. First and foremost, I would like to commend the committee in its effort to recognize and address the major issues impacting the fiscal condition of our town. The effort and level of transparency reflected in the guidelines represent both a philosophical and significant practical change relative to past years. Recognition of these issues however, is only the first step.

The town's operating budget is driven by the following cost obligations: labor (wages), pension contributions and health care, with labor consuming the largest share of the overall budget. The majority of these costs are contractually mandated, which precludes any substantive negotiation within the budget process. Not unlike the federal government, an ever-increasing portion of our budget supports these benefits with limited funds available for other expenditures.

As a result of the continued pressure of the key cost drivers, the preliminary guidelines recommend a 2 percent increase in total operating costs, which corresponds to an increase of no more than 2.5 percent in the mill rate. Although a 2.5 percent increase in the mill rate seems modest, I would contend that this is a misleading metric.

The mill rate is simply a mathematical "plug" that does not adequately reflect the true impact to the taxpayer. Based on the town of Greenwich's "Sources and Uses of Funds" figures included in the guidelines, the overall property tax burden is projected to increase by approximately 6.5 percent next year. Housing values and incomes have fallen, yet the town's operating costs continue to rise. These should not be mutually exclusive events.

As the budget guidelines readily indicate, our nation's economy is still suffering from the effects of the recent recession. Also, although more of a short-term consideration, risks associated with the fiscal cliff should not be fully discounted, as the potential exists for adverse consequences at both the macro- and micro-economic levels.

Given the current economic conditions, we as citizens of this town need to demand justification for the continued year-over-year escalation in costs and associated tax burden, particularly against the backdrop of a weak economy. There is often an argument that cutting expenses will lead to diminished town services. This is not an acceptable argument. Instead, the focus should be on more efficient town government so that services can be provided at a more reasonable cost with fewer resources. Spending has risen dramatically over the years, but this spending is mostly reflected in the expansion of town government versus maintenance of our infrastructure.

The basic premise of each year's budget is to deliver both stable and predictable mill rate increases. While there is some benefit to that philosophy, I would challenge the assumption that taxes should automatically increase each year. Greenwich is not immune to the effects of the recent recession and, as stated earlier, further risks to the economy still exist. The continued growth in spending and compounded impact on tax liabilities is not sustainable.

The town's use of debt has also increased (as compared to the former pay-as-you-go system). Some will ask why wouldn't the town borrow at the current levels? Given a Grand List that is the envy of almost any other municipality in the country, I would respond by saying that we shouldn't be borrowing to begin with. Increased debt, even at low levels, needs to be paid back and exerts yet additional pressure on the citizens of this town.

This is your community. This is your money. You have a right to demand more from the fiscal stewards of our town. You have the right to demand that your hard-earned money is used efficiently and responsibly. I recognize the challenges in trying to deliver a fair and balanced budget. The current economic climate, however, demands fiscal restraint, which requires difficult decisions to be made.

In contrast to what our representatives in Washington have been doing for years, we need to stop kicking the can down the road. Stand up and be heard. Contact your elected officials, contact the BET or contact your district RTM representatives. The time to act and to be heard is now!